If recently reported details of Ontario’s multi-billion dollar climate action plan remain accurate, it’s safe to say that vehicle owners can expect an incredible amount of change over the next decade as the province moves to electrify transportation.
It’s no secret that if Ontario is to meet its climate targets it must turn its attention to tackling transportation emissions, which represent about 35 per cent of provincial greenhouse gases. To do that, the Globe and Mail reported Monday that Kathleen Wynne’s government is going all-in on electric vehicles by turbo-boosting incentives, significantly expanding charging infrastructure, and pushing for electric vehicles to represent a certain percentage of all sales with a specified timeframe. The province expects to cover any costs associated with these moves with the $1.9 billion in annual revenues anticipated from its carbon cap-and-trade program.
The plan — details of which have not been confirmed by the Ministry of the Environment and Climate Change — won’t be released in its final form for a few weeks, but early feedback ranges from “thumbs up!” to “that’s completely ridiculous!”
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“I’m just not sure how well it will go down with the general public,” says Kumar Saha, a senior automotive and transportation analyst with research firm Frost & Sullivan. “Energy costs are already a very touchy issue in Ontario. There’s always this fear that more green spending will ultimately cause energy costs to rise for everyone.”
But Cara Clairman, president and chief executive officer of Ontario-focused electric vehicle advocacy organization Plug’n Drive, says she’s encouraged by what she’s seen so far. “They’ve definitely been listening,” she says. “A number of things have popped up in this plan that we have been pushing for quite some time.”
Some elements are already in place, including rebates of up to $14,000 and up to $1,000 for the purchase and installation of an electric vehicle charging system. The government has also announced its intentions to beef up fast-charging infrastructure across the province.
But to further ease “range anxiety” the province appears ready to partner with New York state to create an electric vehicle-friendly “Lake Ontario Electric Loop” for charging, according to the Globe & Mail report. More than that, it may follow in the footsteps of Quebec by rewriting the provincial building code so that 240-volt electric vehicle-ready outlets become mandatory on all new buildings. For multi-dwelling units such as apartment buildings, expect updated rules that make it easier to install communal charge stations.
Also new in the plan is that the province would eliminate its portion of the HST from electric vehicle purchases — amounting to $3,200 on a $40,000 car — and would offer free overnight charging to owners. Clairman isn’t so sure free overnight charging is sustainable over the long term, but offering the power at a steep discount would make more efficient use of the grid. “There’s surplus electricity at night that we give away or sell at a loss, so it makes sense that we try to use it within the province,” she says. “And the cost to run an EV would be next to nothing.”
Taken together, the sales tax break, free overnight charging and purchase rebates would make for a hard-to-resist trio of incentives for any new car buyer. And the deal gets even sweeter for lower income households that own vehicles manufactured in 2004 or earlier. They’ll get the chance, according to the Globe and Mail report, to trade in their old clunkers in return for an even larger electric vehicle subsidy.
The kicker is that the government plan, if tabled in its current form, aims for annual electric vehicle sales to top 30,000 by 2020 and surpass 100,000 by 2025, up nearly 50-fold from a measly 2,008 in 2015. Such ambitious targets raise a number of critical questions:
Is it realistic?
California, which has had a zero-emission vehicle mandate since 1990, didn’t hit 60,000 in annual electric vehicle sales until 2014, according to Frost & Sullivan. Some say it’s a big leap to think Ontario can do in less than 10 years what took nearly 25 years for California, which also has an economy and population that’s three times larger than Ontario. “I just don’t see those numbers as realistic,” says Saha, echoing the skepticism expressed by many academics and industry officials. (Note that Ontario’s will be a target, not a mandate. Environment Minister Glen Murray has publicly stated that a California-style zero-emission vehicle program is not on the table.)
Still, the landscape has changed substantially over the past few years. There are about 26 pure electric and plug-in hybrid vehicle models available for sale in Ontario today, versus only a handful a few years ago, and numbers are expected to rise substantially before 2020. There are also more models priced under $40,000 and driving range continues to increase, with many pure electric vehicles now capable of driving more than 300 kilometres on a single charge. The technology and price-points will only get better.
If California, under its zero-emission vehicle program, anticipates sales will grow to 1.4 million by 2025, perhaps it’s not unreasonable for Ontario to set a target of 100,000. And it’s aligned with global projections. Recent research from Bloomberg New Energy Finance forecasts that sales of electric vehicles will hit 41 million by 2040, amounting to about a third of new light-duty vehicle sales and almost 90 times 2015 sales. “Big reductions in battery prices lie ahead” and “during the 2020s EVs will become a more economic option than gasoline or diesel cars in most countries,” it reported.
To help drive innovation and capture the job-creation opportunities, the province is expected to commit $140 million toward the creation of a Global Centre for Low-Carbon Mobility.
Will the automakers play ball?
Based on many media reports, one would think Ontario’s auto sector is unified in its condemnation of the government’s electric vehicle and hybrid sales targets. “You can’t get there,” Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, was quoted as saying in the Windsor Star. “Automakers don’t build that many.”
But electric vehicle policy expert Josipa Petrunic, chief executive officer of the Canadian Urban Transit Research & Innovation Consortium, cautions that many of the critical voices being heard are not fully representative of the auto sector. “The reaction is always the highest, loudest voices,” she says. And while Volpe correctly observes that automakers don’t make enough today, that’s just a snapshot in time. “Since a lot of EVs are manufactured in Michigan, it’s not that much of a stretch to imagine them ramping up to accommodate Ontario demand,” Petrunic says.
Clairman agrees. “The manufacturers have already told me that if the climate is right they are going to sell them. So certainly, they can meet the demand. Not tomorrow, but given some time to ramp up, they will.”
Will the vehicle dealerships step up?
In many ways, it’s the auto dealerships that are proving a bigger barrier. “One of the reasons EVs haven’t done as well is because dealers haven’t sold them as well,” says Saha. “The dealer networks push volumes, and EVs are a harder sell. Frankly, there’s also a lack of education and motivation.”
A Plug’n Drive secret shopper dealership survey from 2014 backs this up. Not all Ontario dealerships are certified to sell electric vehicles, and of those that are, only 38 per cent had a floor model and 46 per cent didn’t have one on their lot. Even worse, more than half had no vehicle information openly available to customers and dealerships provided misleading information on electric vehicle rebates 56 per cent of the time.
“It’s not that automakers don’t have the supply, it’s that dealerships don’t have the cars,” Clairman says. “That’s a problem in the relationship between manufacturers and dealers.”
Can the grid handle it?
With tens of thousands of electric vehicles expected to plug into Ontario’s power grid over the next few years, some wonder if the electricity system can accommodate them.
Devin McCarthy, vice-president of public affairs at the Canadian Electricity Association, isn’t concerned. “I’m confident the electricity companies in Ontario will be able to handle that influx of electric vehicles as this comes to pass.”
McCarthy says there’s no question that some equipment may need to be upgraded as electric vehicles begin to cluster in certain neighbourhoods, but meeting that additional load is something local electric companies have spent the past 10 years planning for as part of grid modernization investments.
He says there’s also a lot of room to accommodate electric vehicles on the grid, which is built to handle peak demand — those times in a day when electricity consumption spikes, such as late afternoon during a heat wave when air conditioners across the province are working overtime. “Time-of-use rates in Ontario are designed to shift the demand curve, to flatten it, so more electricity is used during off-peak hours,” McCarthy explains. “If the cars can be incented or managed in such a way that they’re charging during off-peak hours, then I don’t anticipate a major issue there.”
The sector is up to the challenge, he adds. “Electricity companies have some of the best engineers in Canada, and a lot of young engineers who are very keen to sink their teeth into these issues.”
Correction: This article has been updated from an earlier version that misspelled the name of Cara Clairman, president and chief executive officer of electric vehicle advocacy organization Plug’n Drive.